The Pentagon’s new retirement reform proposal would make sweeping changes to the complex system of benefits that aim to compensate wounded warriors for injuries that cut short a military career.

The new rules, proposed as one element of a broader military retirement reform package, would allow more wounded warriors to qualify. It would increase payments to many individual veterans. And it would ultimately cost the Defense Department more money, according to a report unveiled Thursday.

The biggest difference would be the elimination of the offset policy that prevents wounded warriors from collecting disability payments from both the Defense Department and Veterans Affairs Department. As a result, there would be no need for the convoluted rules for exemptions collectively known as “concurrent receipt.”

Under today’s system, most military disability benefits are reduced dollar-for-dollar by the amount that a wounded warrior might receive in disability payments from VA.

The Defense Department’s proposal is an explicit acknowledgment that its current disability compensation benefit is deeply flawed.

Today’s system “does not fully compensate service members for the expected value of a lost military career” and the new proposal is an effort to “close the gap,” according to the new Pentagon retirement report.

On March 6, the Defense Department sent the 44-page report about retirement reform to Capitol Hill and also to the Military Compensation and Retirement Modernization Commission, which is conducting a broad study of pay and benefits.

The proposal would change the qualifications for disability retirement benefits. Currently, a service member must be declared medically unfit for duty and also obtain a disability rating of 30 percent. The new policy would eliminate the 30 percent requirement for service members who have at least 12 years of service.

The new proposal also would change the way disability benefits are calculated. Service members could no longer choose a payment based on their disability rating. Instead, the payment would be based solely on years of service.

For wounded warriors stuck in the military’s limbo of “temporary disability,” which can last up to five years, the floor of disability payments would be raised.